China clean air plan a blow to Australian mega-mines

The Chinese government's plan to improve air quality in the Beijing, Shanghai and Guangdong regions will significantly slow China’s coal consumption growth and deflate coal prices globally even further.

The move will set an important precedent for other regions in China and major economies around the world, Greenpeace said today.

“Earlier this week Premier Newman said opening up the Galilee Basin was vital for the economic future of Queensland. This dependence is looking like an increasingly reckless proposition for the state,” said Ben Pearson, head of program, Greenpeace. “When the world’s largest coal customer looks set to withdraw from the export market, the price of coal will deflate and we risk threatening the Great Barrier Reef to construct needless coal export infrastructure.”

The plan includes a ban on approving new coal-fired power plants in key economic regions that currently have 30% of the country’s coal-fired power generation capacity, and is accompanied by ambitious targets to cut coal consumption in three key provinces. More coastal provinces are expected to make their respective announcement following the national plan, including those that are key coal importers.

"China’s political leadership has set an ambitious timeline to solve China’s air pollution crisis, responding to the mandate set by the Chinese public, especially in the heavily polluted cities around Beijing. The targets can only be met by tackling China’s coal consumption growth, and the plan takes very important steps in that direction," said Li Yan, climate and energy campaign manager at Greenpeace East Asia.

The action plan requires the most polluted provinces to “strive to achieve a negative coal increase” within five years. An implementation plan has already been announced by three provinces; Beijing, Hebei and Shandong. The provinces have pledged to reduce coal consumption by 73 million tonnes or 10% from 2012 level by 2017. The three provinces consumed more coal in 2011 than all of the European Union. Shandong is the largest coal consumer among Chinese provinces and Hebei is the fourth largest.

"Coal accounts for around 80% of China's CO2 emissions. When the most developed provinces are required to cut back their coal burning, China's total coal use growth will slow down compared to earlier projections by experts, and set a precedent for the rest of the country to follow," Li Yan said.

The ban on new coal-fired power plants covers China’s most important coal importing regions, the Pearl River Delta and Yangtze River Delta, responsible for more than 50% of thermal coal imports. With the power sector the main importer of coal, this will very significantly curb future import demand.